Live Ventures Incorporated (NASDAQ:LIVE) Q1 2024 Earnings Call Transcript

Live Ventures Incorporated (NASDAQ:LIVE) Q1 2024 Earnings Call Transcript February 8, 2024

Live Ventures Incorporated misses on earnings expectations. Reported EPS is $-0.22 EPS, expectations were $1.44. LIVE isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good afternoon, everyone and welcome to today’s Live Ventures Q1 Fiscal Year 2024 Earnings Call. [Operator Instructions] Also today’ call is being recorded, and I will be standing by if anyone should need any assistance. Now at this time, I will turn things over to Mr. Greg Powell, Director of Investor Relations. Please go-ahead sir.

Greg Powell: Thank you, Bob. Good afternoon and welcome to the Live Ventures first quarter fiscal 2024 conference call. Joining us this afternoon for the call are Jon Isaac, our Chief Executive Officer and President; David Verret, our Chief Financial Officer; and Eric Althofer, our Chief Operating Officer. Some of the statements we are making today are forward-looking and are based on our best view of our businesses as we see them today. The actual results could differ materially due to a number of factors, including those outlined in our latest forms 10-K and 10-Q as filed with the Securities and Exchange Commission. We have no obligation to publicly update any forward-looking statements after this call, whether as a result of new information, future events, changes in assumptions or otherwise.

You can find a copy of our press release and 10-Q referenced on this call in the Investor Relations section of the Live Ventures website. I direct you to our website, liveventures.com or sec.gov for our historical SEC filings. I will now turn the call over to David to walk you through our financial performance.

David Verret: Thank you, Greg, and good afternoon, everyone. Before I jump again to the numbers for our first quarter, let’s briefly discuss two acquisitions that Flooring Liquidators completed during the quarter. Flooring Liquidators, our retail flooring business acquired two Midwest flooring chains, which added 10 new showrooms in Arkansas, Oklahoma and Missouri. We executed these transactions because we believe there is a significant opportunity for Live Ventures to use our capital and resources to expand and enhance deploying Liquidators business and product offering into new markets. Now I’ll discuss the financial results for our first quarter ended December 31, 2023. Total revenue for the quarter increased 70.5% to $117.6 million.

The increase is primarily attributable to Flooring Liquidators and PMW, both of which were acquired after the first quarter of fiscal year 2023 as well as an increase of approximately $2.8 million in the flooring manufacturing segment. The increase was partially offset by decreased revenues of approximately $6.2 million in our other businesses. Flooring Manufacturing revenue of approximately $29.2 million increased by $2.8 million or 10.6% as compared to the prior year period. The increase in revenue is primarily due to the buildup of its sales force as a result of the acquisition of Harris Flooring Group brands in the fourth quarter of fiscal year 2023. Retail entertainment revenue of $20.6 million decreased approximately $2.7 million or 11.5% as compared to the prior year.

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Q&A Session

The decrease in revenues is primarily due to reduced consumer demand and a shift in sales mix for its used products, which generally have lower ticket sales with higher margins. As previously announced, we added the retail flooring segment in connection with the acquisition of Flooring Liquidators in January 2023. Revenues for retail flooring were approximately $34.3 million in the first quarter. Steel manufacturing revenues of approximately $33.4 million increased approximately $15.4 million or 85.5% as compared to the prior year. The increase is primarily due to the acquisition of PMW in 2023, which contributed $17.5 million of revenue in the quarter. This increase was partially offset by a $2.5 million decrease in our other steel manufacturing businesses due to reduced consumer demand as a result of general economic conditions.

Corporate and other revenues decreased approximately $1.2 million or 93.2% to $100,000 as compared to the prior year period. The decrease is primarily due to the closure of SW Financial in May 2023. Gross profit for the quarter was $36.3 million, up from $21.9 million in the prior year period. The gross margin percentage for the company decreased to 30.9% from 31.8% in the prior year period. The decrease in gross margin is primarily attributable to reduced margins in the Steel manufacturing segment, partially offset by the acquisition of Flooring Liquidators, which contributed a gross margin of 38% in the quarter. The decrease in gross margin in the Steel manufacturing segment is primarily due to the acquisition of PMW, which historically has generated lower margins as well as reduced production in certain other steel manufacturing businesses.

General and administrative expense increased approximately $13.1 million as compared to the prior year period. The increase is due to the acquisition of Flooring Liquidators and PMW, which collectively incurred $14 million of general and administrative expense during the quarter. Selling and marketing expense increased approximately $2.3 million as compared to the prior year period, primarily due to increased sales personnel, trade show activity in our Flooring Manufacturing segment and the acquisition of Flooring Liquidators. Interest expense increased by approximately $2.1 million as compared to the prior year period. The increase is primarily due to increased debt balances related to the acquisition of Flooring Liquidators and PMW. Net loss was approximately $700,000 and loss per share was $0.22 as compared to net income of approximately $1.8 million and diluted EPS of $0.60 in the prior year period.

The decrease in net income is attributable to the lower operating income and increased interest expense. Adjusted EBITDA for the first quarter was approximately $8.7 million, an increase of approximately $1.2 million or 15.3% as compared to the prior year period. Turning to liquidity. We ended the quarter with total cash availability of $45 million, consisting cash on hand of $5.6 million and availability under our various lines of credit totaling $39.4 million. Our working capital was approximately $81.8 million as of December 31, 2023, compared to $85 million as of September 30, 2023. Total assets were $436.6 million and total stockholders’ equity was $99.4 million as of December 31. As part of our capital allocation strategy, we may make share repurchases from time-to-time.

We believe our stock repurchases represent long-term value for our stockholders. During the quarter, we repurchased 4,346 shares of common stock at an average price of $24.51 per share. As of December 31, the company had approximately $3.2 million available for repurchases under our repurchase program. In conclusion, we are pleased that our first quarter revenues increased 70.5% and adjusted EBITDA increased 15.3% as compared to the prior year period. However, our businesses continue to be impacted by industry-specific pressures. As a result, we remain focused on increased productivity, expansion and innovation. Despite the challenging environment, we remain focused on creating long-term value for our stockholders by executing our long-term buy-build-hold strategy.

We’ll now take questions from those of you on the conference call. Operator, please open the line for questions.

Operator: Thank you, Mr. Barrett. [Operator Instructions]

David Verret: Let’s take a question from Mark, please operator.

Operator: Certainly. We’ll go to Mark Schleifer at Alpine Global.

Mark Schleifer: Hi. How is it going. Thank you for taking my question. I was wondering if you guys had any updates with regards to your buyout proposal on LL Flooring?

Eric Althofer: The answer is we do not have an update to share with the public at this time. But I do appreciate the question, Mark.

Operator: Thank you. [Operator Instructions] And gentlemen, it appears we have no further questions this afternoon. I’d like to turn the conference back over to the Live Ventures management team for any closing comments.

David Verret: I just want to thank everyone for joining the call and we look forward to our next earnings release next quarter. Thank you.

Operator: Thank you very much. Again, ladies and gentlemen, that will conclude the Live Ventures Q1 fiscal year 2024 earnings conference call. We’d like to thank you all so much for joining us and wish you all a great remainder of your day. Goodbye.